Evolving trends in the use of agricultural exports restrictions and possible options to regulate them

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1 CLIMATE AND AGRICULTURE NERGY 08 JULY 2015 Nairobi, Kenya Evolving trends in the use of agricultural exports restrictions and possible options to regulate them Gerald Makau MASILA, Executive Director, Eastern Africa Grain Council

2 Evolving Trends is Use of Agric Exports Restrictions in ESA Countries in ESA have from time to time applies Export Restrictions Kenya Ban on MAIZE Exports, still in Force! 50% import tax on Maize from outside EAC Zambia/Malawi/Zimbabwe Ethiopia Tanzania Ban on Maize Export from time to time. Ban on Maize, Beans Exports lifted in 2013/14 Export Ban on Food in 2010/11 Season. Lifted in 2012/13

3 Implications of Agric Export Restrictions in Food Security SHORT TERM Effective in limiting increase in Domestic Food Prices Cause increase in Food Prices in Importing Country. Cross Border Food Trade still takes place INFORMALLY, increasing transaction costs, further raising food prices in import country. MEDIUM TERM TO LONG TERM Dampens producer prices and incomes, limiting resources for next season production triggers a vicious cycles

4 Export Restrictions & Current Int l Trade Discipline to Regulate Export Restriction Regulations used are on EXPORT QUATITY and EXPORT TAXES. In a sensitive Issue, remains UNDER REGULATED, with WEAK PROVISIONS, largely IGNORED. International Trade Rules on Export Restrictions DO NOT DEFINE CIRCUMSTANCES for Restrictions. At Regional Level, Export Restrictions are still contentious in the EPA s negotiations. Recognition for the right and obligations for Governments to ADDRESS FOOD SECURITY OBJECTIVES for their citizens

5 Cont. There are options under WTO to regulate Export Restrictions such as Exemptions on food aid purchases Improving enforceability of existing disciplines Limiting impacts on world markets Prohibition of use of restriction on exports to poor net food importing countries Stricter disciplines for export restrictions can be declared illegal Full symmetry in regulating import and export restrictions

6 Recommendations. in view on Nairobi WTO Ministerial. Questions: 1. Are countries JUSTIFIED in imposing Food Export Restrictions?... If so Under what circumstances/conditions and how (procedure) should it be applied? 2. Are low stock levels and Increasing food prices necessary and sufficient conditions for application on Export restrictions? 3. Beside Export Restrictions, are there other measures that can be taken to address food security/taming price increase? 4. Does Domestic Industry incentive/support for Raw material for local procession/value addition justify Export Restriction?

7 Recommendations 1. There is need to develop Guidelines, Rules & Regulations under which countries can apply Export Restrictions and a procedure. 2. Avoid DRASTIC and SHORT TERMIST interventions that DISRUPT business and create UNCERTAINITY. Case Study : PACT TZ. 3. Adopt a REGIONAL OUTLOOK to the Food Security aspects, and encourage/promote regional cross border trade in food to meet domestic supply deficits. 4. Self Sufficiency in food production is a desirable but not necessarily achievable. Recognize the role of TRADE in addressing food security, and exploit competitive and comparative advantages.

8 Recommendations 5. Employ SUBSTITUTION strategies across commodities eg. Yellow Maize for Animal Feeds, and ease pressure on white maize. 6. Strengthen DATA and INFORMATION Systems to verify actual status of Food Availability and to inform decision making. Encourage application of decision making tools such as the Food Balance Sheet, and provide resources and expertise for the data collection, analysis etc in a Public Private Partnership model. 7. Stakeholder & Industry Consultations for joint problem solving in addressing the food security challenges and explore various option Case Study. Kenya 2014, Food Deficit situation

9 Recommendations cont 8. Strategy Differentiation in addressing different objectives. Food Price Stabilization Subsidize consumer price to make food affordable without hurting producers and discouraging them? Facilitate IMPORT TO BRIDGE GAP in domestic production rather than imposing Export ban? Diversify production systems (Small holder, Medium, Large and Irrigation) as a risk mitigation mechanism? Productivity increase strategies for Supply to domestic industry? Gerald Makau Masila Executive, Director, Eastern Africa Grain Council